The strength of Houston’s northwest industrial submarket is continuing to seep out to bordering markets in the north and west.

As Houston’s economy grows stronger and bigger, more companies are looking to move to the traditional heart of the city’s industrial development — northwest Houston. But they face a problem: Space is tight. That’s why they are gradually shifting to locations in surrounding areas to the north and west.

With this type of growth spilling out on all sides, industrial real estate deals are going through the roof.

“The first six months of this year were as busy and active as 2007, (which was a good year),” said John Ferruzzo, principal and industrial division leader for NAI Houston. “Everyone in my group is on pace to have a record year. I think this is the best industrial market in the country.”

Pretty much anyone with land in or near northwest Houston is looking to build on it, Ferruzzo said. In fact, the market is flooded with speculative construction.

“Now that the market is hot again, there is a glut of new construction,” Ferruzzo said.

Most of this new construction is designed to fit the needs of oil and gas-related manufacturing and distribution companies, said Jim Foreman, the executive director of Cushman and Wakefield of Texas Inc.

“In my opinion, when we talk about the north market, there are two reasons there is more development and interest. First, there is not much room to develop in the northwest, and it has good access (to major roads such as Interstate 45),” he said. “The activity in the west is because there is strictly a lack of developable land in the northwest, so developers are starting to look out west.”

However, unlike in 2007, Foreman believes Houston still has room to grow in terms of industrial development.

“One thing that is interesting is all of the outlying areas of Houston — Katy, the Woodlands, even in the east in Deer Park — are growing in population dramatically,” he said. “So, you are going to see more distributors and warehouses with commodity products.”

Still, all this new construction and growth comes at a price. Ferruzzo pointed out that developers would rather lease their industrial buildings than sell them, however, many companies are in the market to buy industrial buildings.

“Interest rates are low, and you can get a much cheaper interest rate than you could 12 to 18 months ago,” he said. “The sales market is the hottest thing we are seeing.”

Despite the fact that more industrial developers are selling land and buildings rather than leasing them, they are happy to be moving real estate, Ferruzzo said.